There are a number of threads on Pprune that suggest, time and again, that the General Aviation Industry is in decline a postulate I tend to agree with although I have no hard evidence for it. I would like to suggest that, if true, the decline of GA is the proverbial “canary in the coal mine” – the delicate organism that is perhaps the most sensitive part of our economy and the first to signal the onset of lethal economic shock – by dying.

I label the GA industry, and aviation in general with the exception of the space industry as arguably the most sensitive creation of industrial Western civilisation. We are not an avian species and the design, manufacture, supply, maintenance, repair, operation, education, training and regulation of aviation is about as sophisticated a creation a relatively small group of people has ever developed. When we fly something we are at the pointy end of a supply chain that not only stretches around the world but stretches backwards in time – embodying everything we think we know or have discovered since the Wright Brothers.

Now in my opinion, this makes the aviation industry uniquely sensitive to the economic virus that not only killed the Roman Empire but to this day still determines the wealth of nations.

The name of the virus is transaction costs. Now a transaction cost as most would know, is a cost of doing business. It is not a material cost like avgas or a new tyre, it adds nothing to the experience.

In aviation, the classic example is the release note. It tells us that the part meets specification and is legal to apply to an airframe. The release note doesn’t make the aircraft fly, what it does is tell us that a myriad of transaction costs have been paid for things like raw material traceability, quality control systems, certification, insurance and legal costs, occupational health and safety, etc., etc., etc.

Now we know that some of these costs are unavoidable and beneficial – we like to know the aircraft is as safe as it is possible to make it – approved parts and all that, but the trouble is that things get more expensive as transaction costs mount up – it has even been suggested that about a Third of the cost of an aircraft these days is insurance and legal – ie: transaction costs.

To put it another way, outside of the space and perhaps the health industry, I can think of no other industry as bound up in Red Tape as aviation. Terence Kealey in his excellent work “The Economic Laws of Scientific Research”, points out that what destroyed the Roman Empire was not the Goths and Vandals, it was red tape.

The entire Roman economy was mired so deeply in custom, tradition, procedure and law that the weight of supporting the entire regulatory and Governance infrastructure simply crushed the agricultural industry it relied on – the labourers essential to the system were taxed so much that their families starved, no matter how much grain they produced.

It was the transaction costs that killed the Roman Empire – the weight of central Government simply got too large to support.

Production fell. Taxes and tax collectors multiplied and the system collapsed under its own weight. The Goths and Vandals simply took advantage of Romes weakness. They were greeted as liberators in the Roman provinces – sweeping away a plethora of suffocating taxation and hidebound Roman law.

Francis Fukuyama adds another dimension in his work “Trust: The economic value of Trust and Cooperation”. Trust has been ignored by economists. Fukuyama argues that the existence of high levels of trust between people reduces transaction costs when doing business. More importantly, he argues that you cannot do business with someone you don’t trust without very high transaction costs as you try and protect/insure yourself against bad behaviour. My first employment contract was a handshake. My last was Thirty pages. Guess which contract was built on trust and what it cost.

So what has this to do with aviation, especially General Aviation?

The answer is “everything” because we rely on a chain of trust from start to finish and any weakening of trust levels throughout the industry is immediately going to cause pain.

So people are worried about AirServices Australia? The ATSB? CASA? What do we think we see?

Declining levels of trust.

Then there are the suppliers: are aircraft and related supplies getting cheaper by the day? Blame transaction costs. Is your airport under attack from shifty property developers – add another transaction cost.

Even more transaction costs are soon to be heaped on General Aviation if my own experience is any guide. Wait for the Occupational Health and Safety Nazis to infect the industry. The first signs of an infestation of these Oxygen thieves will be a rash of mandatory flouro vests on the tarmac, after that they become very creative in saddling you with all sorts of safety measures that increase your transaction costs out of all proportion to their claimed benefit – and they never stop adding to the crushing weight.

In the marine area, which I inhabit, I am aware of British regulations that require any worker even walking on a marina to wear a hard hat and life jacket. Our own planning process for an extension to our marina has taken ten years, for The StKilda marina, the process has taken Twenty Seven years!

We are surrounded by oxygen thieves and bear in mind that every coven of them requires secretarial support, gender equity awareness trainers, an indigenous opportunity executive and of course their own strategic plan to be printed on glossy paper at great expense.

Some of us hope to avoid the oxygen thieves and their baskets of transaction costs. I plan to move to the country and I’m building a kit aircraft, but I have no illusions. They will come after me eventually when they have finished killing GA.

Then they will kill the rest of the Australian economy – just ask the miners how long an approval process now takes.

Furthermore, don’t even think about building a new petroleum refinery, airport or power station, the sun will die before the approvals are granted.